As
companies around the world have struggled to survive in difficult economic
times, many have chosen to reduce the size of their workforce by eliminating
one or more layers of middle managers. While many companies have traditionally
had very steep bureaucracies, with too many levels of management, simply
eliminating large numbers of middle managers by firing them or offering them
early retirement is, from my point of view, a mistake.

In
stripping out levels of middle management, companies often discard large groups
of employees whose knowledge and experience cannot be easily replaced. These
"expendable" middle managers often have:

·A decade or more of experience in
the company.

·Outstanding achievement records
(or they would not have been promoted to middle management).

·Unparalleled knowledge of the
company, its products, its customers, and suppliers.

·More knowledge than most others
in the company about how things work and how work gets done.

·Substantial insights about how
the company's business can be improved.

These middle managers are, therefore, among the most
valuable knowledge assets within the company. So while the company may no
longer need as many middle managers to run its business, it can be harmed by
tossing these assets aside. Knowledge assets cannot be replaced easily.

Alternative
roles for at least some portion of these middle managers can maximize the
company's return on these valuable assets, and on the large investments the
company has already made in these people. The transition to new roles will not
come easily to middle managers. They will need to deal with their own perceived
loss of rank, status, and privilege, at the same time refocusing on a whole new
career path.

In
one company, a group of middle managers were assembled and told that their jobs
were changing. While none of them was being fired, they would be given other
roles and responsibilities as individual contributors in various functional
areas. One manager asked, "What am I supposed to tell my family?"
with obvious emotion in his voice.

In
a later one-on-one meeting with a senior company manager, he explained, "I
am one of ten children, and the first to get off the farm and go to college. My
family has followed my career in this company with great pride, celebrating
each promotion, each step up the ladder. Now, I'm no longer on the ladder. What
am I going to tell my parents, my brothers, my wife, my children?"

Even
while defining new roles for former middle managers, companies need to pay
attention to the psychological effects these changes have on their employees.
There are many possible alternative roles for these former middle managers. My
focus will be on three specific roles:

·Teacher

·Intrapreneur

·Strategic relations manager

From Middle Manager to Teacher

To
succeed in becoming a learning organization, implementing TQM or business
process reengineering, almost everyone in the company will need to learn one or
more new sets of skills. Middle managers, by virtue of years of company
experience, often make very effective teachers. Even if they need to learn the
subject matter before being able to teach it, they can immediately make it
relevant to the company's culture and business issues, and to the concerns of
the many employees who, like themselves, are struggling to understand how they
fit into the new model.

The
transition from middle manager to teacher requires helping the middle manager
learn both the subject matter to be taught and basic instructional skills. But
this is a relatively small investment as compared with the company's other
choice: trying to furnish an external instructor with the knowledge of the
company's culture that is already second nature to the middle manager because
of his years of experience.

Not
every middle manager can become an effective teacher. Some managers will
disdain the opportunity as not being a suitable replacement for their former
roles. Other managers will lack the basic communications skills needed to be an
effective teacher. And others will opt for other roles being described here, or
will leave the company for employment elsewhere. For those few who do choose
this new role, the benefits to themselves, their students, and the company as a
whole can be outstanding.

From Middle Manager to Intrapreneur

The
"intrapreneur" is a hero of business. He is
the person who comes up with an idea for a new product or service, usually related
to the company's primary business, which brings new opportunities for profit
and market share to the company.

Surveys
of middle managers have shown that they have many ideas for improving aspects
of their companies' business and for new opportunities for their companies. The
old, hierarchical structure of many companies did not provide any avenue for
these ideas to surface. In the transformed corporation, these ideas will easily
make their way into the discussion arena.

Rather
than handing middle managers their severance packages as they are escorted out
the door, companies should give managers an opportunity to develop some of
their intrapreneurial ideas, suing a five-step plan
for this process:

·Step 1: Identify a group of
middle managers whose jobs are being eliminated.

·Step 2: As an alternative to the
severance package, give them the opportunity to develop one of their own ideas
for a new business into a business proposal

·Step 3: Provide them with an
intensive course on develop a business plan.

·Step 4: Let them continue to use
their offices and support services as they develop their plans.

·Step 5: Have them present their
plans to a committee of top company managers. If the proposal is accepted, they
stay and lead the new business effort. If the proposal is not accepted, they
leave the company with whatever they have remaining of their severance packages
and are allowed to take their business plan to other companies.

Not every middle manager whose job is being eliminated
will take this option. But this program can be very empowering for those who
choose to participate, and may be very profitable for the company with little
risk or extra expense being assumed.

From Middle Manager to Strategic Relations Manager

Few
companies today are totally vertically integrated -- totally self-reliant for
everything from raw materials production to after-sales service. Today's
business world is one of interdependence, with value chains encompassing many
suppliers and customers who may be scattered around the world. As companies
strive to transform themselves, they also must pay attention to the external
segments of their value chains, forming strategic relationships with key
suppliers and customers. These strategic relationships can take many different
forms, such as:

·Certifying key suppliers
according to the company's new quality standards.

·Working with both suppliers and
customers to facilitate both incoming and outgoing just-in-time (JIT)
deliveries.

·Forming basic research
partnerships with other companies or universities, focused on new materials or
manufacturing methods.

·Developing new sales channels in
foreign markets.

·Developing joint ventures to
enter new markets.

These and many other types of strategic initiatives, which
are increasingly vital in forging a company's future, have often gone wanting
for lack of interest or manpower. Why not focus some of the energies and
capabilities of former middle managers on building and managing these and other
types of strategic relationships?

There
are many key strategic roles that former middle managers might play that will
enable a company to continue obtaining a return on their investment in these
people. For example:

·Many large companies have found
it necessary and desirable to provide quality-related training and consultation
to their suppliers -- especially small suppliers who do not have their own
training staffs.

·Many companies have formed
industry consortia to fund research and development activities that they cannot
afford to do alone.

·Other companies have formed
university-based consortia to fund research into future management, information
technology, engineering, or manufacturing technologies and practices.

There is virtually no company that cannot benefit from
such partnerships and collaborations. These types of programs are extensions of
the learning organization, in which companies are harnessing the knowledge of
people outside, as well as inside, their own organizations.

Can All Middle Managers Be Saved?

As
companies look at their flattening pyramids, thousands of middle managers are
being caught in the crush. The fact is that many of today's middle managers are
so stuck in their ways that they won't be able to change, to adapt to new work
methods, new relationships, and the new types of roles being described here.
The flattening of organizations is long overdue, and it is doubtful that even
combining all of the new roles in any one company will provide enough new
opportunities to save all former middle managers. But even if these new roles
create opportunities for only 10 to 25 percent of the displaced managers, the
company will be accomplishing a number of important goals:

·It will preserve its investment
in these long-term employees.

·It will be utilizing these
valuable resources to build the company's future, at the same time
demonstrating to its employees and stockholders that it is open to new ideas.

·It will be sending a clear and
important message to all of its employees and stockholders that it is concerned
not only with cutting current costs, but in creating a real, exciting, and
profitable future as well.

Dan Tobin
welcomes your reactions to and comments on this article.To send him e-mail, click
here or send email to DanielTobin@att.net.